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adidas aglow as Q3 sales leap on performance, urbanwear success

adidas was on a high Thursday, reporting better-than-expected Q3 earnings on double-digit sales increases. Step forward Sport Performance and urbanwear units Adidas Originals and Neo for particular praise.

The German athletic sportswear giant said quarterly net profit to end-September rose 24% to €386m ($429.2m) from €311m a year ago as EPS grew 21% to €1.88 from €1.55.

Currency adjusted sales jumped 17% to €5.4bn, beating analysts’ views, driven by strong momentum at both its adidas and Reebok brands.

“The great momentum across all major markets shows the strength of our strategy,” said new boss Kasper Rorsted.

No wonder he added: “I am extremely happy to be the CEO of a company that is doing so well.”

On the back of no less that four performance upgrades this year, adidas is on a roll, clawing back its second spot from rival Under Armour in North America. Q3 sales there rose 20% to €927m, boosted by strong performance in product and streetwear sales.

Elsewhere, currency-neutral sales grew at double-digit rates in all segments, except Russia/CIS, where revenues rose 7%.

Revenues in Western Europe increased 15% on a currency-neutral basis, driven by the UK, Germany, France, Italy, Spain and Poland, where revenues grew at double-digit rates each.

Latin America revenues grew 16%, reflecting double-digit sales increases in Argentina, Peru and Colombia as well as high-single-digit growth in Mexico and Chile.

In Japan, sales were up 21%, currency-neutral. MEAA grew 19%, driven by double-digit growth in South Korea, Australia, the United Arab Emirates, South Africa, India and Thailand.

adidas, meanwhile, confirmed its outlook for 2016. It expects full-year sales to rise by a high-teens percentage rate, with net profit ranging €975m-€1bn. Gross margin is expected to range 48%-48.3% while operating margin is expected to increase to up to 7.5%.


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